As a child, all of us have been taught by our parents or grandparents at home that sustainability is based on a simple principle that everything we need for our survival and well-being depends, directly or indirectly, on our natural environment.
Once we grow as adults and begin to look for earning our livelihoods, we tend to dilute those basic principles, learnt as children, forgetting that sustainability creates and maintains the conditions under which humans and nature can exist in productive harmony that permit fulfilling the social, economic and other requirements of present and future generations. That is at the individual level. The same example can be applied to companies that grow for big corporate houses.
By aligning CSR initiatives with global sustainability goals, businesses can contribute meaningfully to the well-being of all stakeholders and the world we inhabit. CSR acts as a guiding force, urging companies to generate value for society and the planet, not just profits. Corporate Social Responsibility (CSR) is generally understood as the way through which a company achieves a balance of economic, environmental and social imperatives, which the United Nations Industrial Development Organization describes as a “Triple-Bottom-Line- Approach” while at the same time addressing the expectations of shareholders and stakeholders.
Corporate sustainability essentially refers to companies’ role in meeting the agenda of sustainable development and entails a balanced approach to economic progress, social progress and environmental conservation. The concept of CSR in India is not new. The idea was supported by several religions, where it has been intertwined with religious laws. Hindus follow the principle of “Dhramada” or “Zakaat”, followed by Muslims, similarly and Sikhs, the “Daashaant”.
While sustainability is about factoring the social and environmental impacts of conducting business, that is, how sustainably profits are made, Corporate Social Responsibility (CSR) focuses on what is done with the profits made and whether they are utilized for the greater good of the society. Hence, the practice of CSR is an important component of sustainability or responsible business.
In this sense, it is important to distinguish CSR, a strategic business management concept, from charity, sponsorships, or philanthropy. Even though the latter can contribute to poverty reduction, directly enhancing a company’s reputation and strengthening its brand, the concept of CSR goes beyond that.
According to a study by KPMG on this subject, the rates of sustainability reporting among the world’s leading 250 companies are at an impressive 96 per cent. Reporting rates are expected to grow as awareness increases and regulations become stringent.
The term sustainability has been used in conjunction with CSR in the Department of Public Enterprises (DPE) Guidelines title because CSR activities envisaged in the Act and the CSR Rules can be supplemented with sustainability initiatives as both aim to achieve sustainable development goals. In the Guidelines, the need to take sustainability initiatives is emphasized in addition to the requirement of mandatory compliance with the CSR Rules.
The Guidelines aim to provide an overarching framework of sustainability within which CSR is firmly embedded. Therefore, CPSEs are advised to read the CSR Rules and the Guidelines to understand what stakeholders expect clearly.
Since CSR and Sustainability issues are complementary, and both are to be mentioned in the policy document, it was suggested that it may be referred to as the `CSR and Sustainability’ policy.
The change in terminology of the policy document and its information expanse would not detract from the Central Public Sector Enterprises CPSE’s) commitment to CSR or dilute its content. Rather, it would only indicate the willingness of the CPSE to voluntarily take a few extra steps to address social, economic and environmental concerns, which may be beyond the realm of CSR as envisaged in the Act and the CSR Rules but are nevertheless worthy of attention for the promotion of sustainable development in its diverse dimensions.
Enactment of Companies Act, 2013 by the Ministry of Corporate Affairs, Government of India was one of the world’s largest experiments in introducing CSR as a mandatory provision by imposing a statutory obligation on Companies to take up CSR projects towards social welfare activities. This has made India the only country which has regulated and mandated CSR for some select categories of companies registered under the Act. This CSR Initiative will push the nation towards achieving sustainable development goals and public-private partnerships in transforming India.
CSR provisions aim to involve the corporates as partners in the social development process. The use of corporate innovations and management skills in the delivery of ‘public goods’ is at the core of companies’ CSR implementation. Therefore, CSR should not be interpreted as a source of financing the resource gaps in Government Schemes. However, the Board of the eligible company may undertake similar activities independently subject to the fulfilment of Companies (CSR Policy) Rules, 2014.
Every institution, Indian and global, is committed to managing Sustainability through CSR activities. Environmental Sustainability and philanthropic initiatives are at the core of the International Monetary Fund’s corporate social responsibility program. For more than a decade, the IMF has taken steps to reduce its impact on the environment while ensuring that it can effectively serve its global membership.
To further advance this work, it established the Environmental Sustainability Council in 2021 to advise and provide directional guidance to IMF management on the organization’s operational environmental issues. The institution has also continued to invest in and manage new building technologies to reduce energy consumption and introduce new policies for greening the IMF’s global vehicle fleet.
Mandating CSR helped the corporate sector transition from a voluntary and unsystematic approach to a structured way of contributing to social welfare. Although the law has infused capital into the social sector, the program’s impact and effectiveness must be measured to help identify gaps and solutions.
Promoting the uptake of CSR amongst SMEs requires approaches that fit the respective needs and capacities of these businesses and do not adversely affect their economic viability. As discussed earlier in this article, UNIDO based its CSR programme on the Triple Bottom Line (TBL) Approach, which has proven a successful tool for SMEs in developing countries.
It has helped them meet social and environmental standards without compromising their competitiveness. The TBL approach is used to measure and report corporate performance against economic, social and environmental performance. It attempts to align private enterprises to the goal of sustainable global development by providing them with a more comprehensive set of working objectives than profit alone. The perspective taken is that for an organization to be sustainable, it must be financially secure, minimize (or ideally eliminate) its negative environmental impacts and act in conformity with societal expectations.
Key CSR issues like environmental management, eco-efficiency, responsible sourcing, stakeholder engagement, labour standards and working conditions, employee and community relations, social equity, gender balance, human rights, good governance, and anti-corruption measures are critical to ensure sustainability.
It has been proven that a properly implemented CSR concept can bring along a variety of competitive advantages, such as enhanced access to capital and markets, increased sales and profits, operational cost savings, improved productivity and quality, efficient human resource base, improved brand image and reputation, enhanced customer loyalty, better decision making and risk management processes.
